123 – Reinventing Management – Architecture and Ideology. Gary Hamel.

Gary Hamel starts his dissection of large organisations with a series of descriptors; inertial, incremental, and insipid. Reading his paper made me feel like returning to small business. I once heard the Chief Executive Officer of the Australian Industry Group talking about a poll of his members. He asked them what they would like from government and they said that they wanted government to be positive, intelligent, and credible – the antidote to the inertial, incremental and insipid.

Hamel is describing what he calls the congenital disabilities of large organisations. By inertial, Hamel means that they are ‘frequently caught out by the future and seldom change in the absence of a crisis’.

“Deep change, when it happens, is belated and convulsive, and typically requires an overhaul of the leadership team.”

By incremental, Hamel means that despite their resource advantages, incumbents are seldom the authors of game-changing innovation.

“It’s not that veteran CEOs discount the value of innovation; rather, they’ve inherited organizational structures and processes that are inherently toxic to break-out thinking and relentless experimentation. Strangely, most CEOs seem resigned to this fact, since few, if any, have tackled the challenge of innovation with the sort of zeal and persistence they’ve devoted to the pursuit operational efficiency.”

By insipid, Hamel means they are emotionally sterile. He says that managers know how to command obedience and diligence, but initiative, imagination and passion can’t be commanded—they are gifts.

“Every day, employees choose whether to bring those gifts to work or not, and the evidence suggests they usually leave them at home. In Gallup’s latest 142-country survey on the State of the Global Workplace, only 13% of employees were truly engaged in their work. Imagine, if you will, a car engine so woefully inefficient that only 13% of the gas it consumes actually combusts. That’s the sort of waste we’re talking about. Large organisations squander more human capability than they use.”

He believes that to build organisations that are fit for the future, we need to think about the things we never think about—the taken for granted assumptions. Hamel says that the performance of any social system (be it a government or a corporation), is ultimately limited by the beliefs of its members, which are encapsulated in creeds and structures.

“Until we challenge our foundational beliefs, we won’t be to build organizations that are dramatically more capable than the ones we have today. Despite our best efforts, we will fail to build organisations that are as nimble as change itself. We will fail to make innovation an instinctual and intrinsic capability. We will fail to inspire extraordinary contributions from our colleagues and employees. If we’re serious about tackling the core incompetencies that afflict our organizations, we have to start by scrutinizing the architecture and ideology of modern management—two topics that aren’t often discussed in boardrooms or business schools.”

Hamel describes the organisations that most of us work in. Places where strategy is set at the top, power trickles down and the big leaders appoint the little leaders. In this environment, individuals compete with each other for promotion and compensation goes with rank. Tasks are assigned to people working within rules that control their actions. The managers assess performance. He is describing the ‘command and control’ thinking that John Seddon has diagnosed as being at the heart of problems in the public service.“Ask just about any anyone to draw a picture of their organization—be it a Catholic priest, a Google software engineer, a nurse in Britain’s National Health Service, a guard in Shanghai’s Hongkou Detention Center, or an account executive at Barclays Bank—and you’ll get the familiar rendering of lines-and-boxes. This isn’t a diagram of a network, a community or an ecosystem—it’s the exoskeleton of bureaucracy; the pyramidal architecture of “command-and-control.” Based on the principles of unitary command and positional authority, it is simple, and scaleable. As one of humanity’s most enduring social structures, it is well-suited to a world in which change meanders rather than leaps.”

“A formal hierarchy overweights experience and underweights new thinking, and in doing so perpetuates the past. It misallocates power, since promotions often go to the most politically astute rather than to the most prescient or productive. It discourages dissent and breeds sycophants.”

Again, this accurately describes what is preventing the development and adoption of a ‘local government business model’. The particular challenges facing local government, and the appropriate management response, are masked by executives clinging to the past. They are so invested in the status quo that they have no comprehension of how life could otherwise be.

As Hamel identifies, senior leaders become ‘gatekeepers’ of change when the responsibility for setting strategy and direction is concentrated at the top of an organisation. When they are unwilling to adapt and learn, the whole organisation becomes moribund.

“You can’t endorse a top-down authority structure and be serious about enhancing adaptability, innovation or engagement.

So what’s the ideology of bureaucrats? Controlism.”

He sees managers as worshipping at the altar of conformance – ensuring conformance to specifications, rules, deadlines, budgets, standards, and policies. Bureaucrats are ideologically and practically opposed to disorder and irregularity. The problem, especially for local government, is that, as Hamel describes, it is ‘the irregular people with irregular ideas who create the irregular business models’ and create tremendous value – the public value sought by communities from their local government.

Hamel is not advocating laissez-faire management. He says that control is important, along with alignment, discipline, focus, and accountability. However, he says that if an organisation is to adapt to change, individuals need the freedom to bend the rules, take risks, launch experiments and pursue their passions.

“The most profound challenge facing 21st-century leaders is ‘how to reap the blessings of bureaucracy—control, consistency and predictability—while at the same time killing it’. Bureaucracy both architecturally and ideologically, is incompatible with the demands of the 21st century.

I meet few executives around the world who are champions of bureaucracy, but neither do I meet many who are actively pursuing an alternative. For too long we’ve been fiddling at the margins. We’ve flattened corporate hierarchies, but haven’t eliminated them. We’ve eulogized empowerment, but haven’t distributed executive authority. We’ve encouraged employees to speak up, but haven’t allowed them to set strategy. We’ve been advocates for innovation, but haven’t systematically dismantled the barriers that keep it marginalized. We’ve talked (endlessly) about the need for change, but haven’t taught employees how to be internal activists. We’ve denounced bureaucracy, but we haven’t dethroned it; and now we must.”

Hamel believes that leaders need to acknowledge that any change program that doesn’t ‘address the architectural rigidities and ideological prejudices of bureaucracy’ won’t change much at all.

This is a sobering message for those of us working in the public service bureaucracy of local government. We are in a bastion of bureaucracy and bunkered down to resist all attempts to de-throne it – and us along with it.